Japan’s parliament has decided to roll out stricter anti-money laundering (AML) procedures for cryptocurrency transactions from June 1, 2023. The move aims to bring Japan’s legal framework in line with global crypto regulations.
The new measures will require cryptocurrency exchanges to collect more information from their customers, including their names, addresses, and identification numbers. Exchanges will also be required to report suspicious transactions to the Financial Services Agency (FSA).
The travel rule, which requires any financial institution processing a crypto transfer greater than $3,000 to pass on customer information to the recipient exchange or institution, will also be enforced.
The new AML measures are part of Japan’s efforts to comply with international standards and to crack down on money laundering and terrorist financing. The FSA has said that the new measures are necessary to protect investors and ensure the integrity of the cryptocurrency market.
The new AML measures have been met with mixed reactions from the cryptocurrency industry. Some exchanges have welcomed the measures, saying that they will help to improve the security of the cryptocurrency market.
Others have expressed concerns that the measures will be too burdensome and will make it more difficult for people to access cryptocurrency exchanges.
The FSA has said that it will work with the cryptocurrency industry to ensure that the new AML measures are implemented smoothly. The FSA has also said that it will provide guidance to exchanges on how to comply with the new measures.
Japan was one of the early adopters of cryptocurrency, legalizing it as property in 2017. Crypto regulations in Japan are some of the most stringent globally.
Japan’s financial regulator, the FSA, tightened rules on cryptocurrency exchanges following the major hacks of the exchanges Mt.Gox and Coincheck.
The FSA has several rules for exchanges to protect customers including separate holdings of customer and company assets, with holdings verified in annual audits.
Investors cannot borrow more than twice their investments for leveraged trades on exchanges. Licensed crypto exchanges are also required to hold at least 95% of customer funds in cold wallets.
